Home Buying - 20 Tips For First Time Home Buyer
Posted by Shefali Raghav on
Buying a home for the first time is very exciting - no more renting. Here are 20 easy steps you can follow to simplify the process and get you on the way to finding your perfect dream home.
1. Save for a Down Payment Early
It's common to put 20% down, some loan programs require as little as 3% down, but smaller down payments can mean higher costs for private mortgage insurance.
2. Decide How Much Home You Can Afford
Before you start your home search, you should know what your price range is based on your income and savings.
3. Review Your Credit
No matter what kind of a loan you're applying for, your credit will always be a key factor. Make sure you dispute any errors and take care of opportunities to improve your credit where you can.
4. Learn About Your Down Payment Options
There are lots of first-time homebuyer programs, including federal mortgage programs with Fannie Mae and Freddie Mac that allow for 3% down.
5. Research State and Local Assistance Programs
Like federal programs, many states offer assistance programs for first-time home buyers with perks like tax credits, low down payments, or even interest free loans.
6. Save for Closing Costs
You will also need to budget for closing costs, which generally run between 2% and 5% of your loan amount.
7. Account for Additional Costs
Besides down payment and closing costs, you'll want to set aside additional funds for new furnishings, appliances, paint, or finishing touches on the home.
8. Explore Mortgage Choices
30-year fixed rate mortgages are the most common, but if you can afford to make larger monthly payments the lower interest rates on 20-year or 15-year mortgages could save you money over the life of the loan.
9. Get a Preapproval Letter
Getting pre-approval requires us to throughly examine your finances, and we confirm in writing how much we are willing to lend you and at what terms. This letter makes you look like a serious buyer to a potential seller.
10. Hire a Great Buyers Agent
The right agent should be highly skilled, motivated, and knowledgeable about the area you're looking to buy in.
11. Look at Properties You Can Afford
Look for homes under the loan amount you're approved for, while you can technically afford the amount of your pre-approval, you will want wiggle-room in your budget for emergencies or unforeseen circumstances.
12. Pick a Neighborhood for Your Needs
Research the local school system, crime and safety statistics, what amenities are nearby, how long is your commute to your job? All of these factors contribute to picking the right home for you!
13. Do Some 'Detective Work' at the Open House
This is an opportunity to scope out the potential neighbors and neighborhood, also pay close attention to the home's condition: look for stains or repairs that may be needed. Ask a lot of questions about the home!
14. Buy a Home for the Future
Do you have a growing family or plan on starting one? Purchase with your future plans in mind.
15. Don't Sweat the Little Stuff
Don't get caught up on the details like paint color, fixtures or carpets! You can change these features once you own the home!
16. Be Ready to Make Compromises
It's uncommon to find your dream home right away, more than likely you will have to be willing to make compromises, set realistic expectations for what is most important.
17. Make a Strong Offer
Consider if you're willing to pay over the asking price or if you would rather stick to the listing price.
18. Avoid Blowing Your Budget
Remember you want to stick as closely as possible to the budget you originally set, even if the home is perfect for you.
Negotiate terms with the seller, does the home need any repairs or perhaps the seller is willing to help pay closing costs?
20. Know the Limits of a Home Inspection
Once your offer is accepted, you'll pay for a home inspection to assess the overall condition of the home. Don't be afraid to ask your inspector for details on specific concerns or questions you may have.
It's advisable for first time home buyers to follow these steps before actually become a first time home buyer.Remember, it will absolutely be a long procedure,but it'll be worth it once you move in and can enjoy having your own house for years to come.